Big fish in a small bowl

Why specialization is essential to business growth

Growth strategies are often counterintuitive. For many, throwing a wide net to catch as many fish (customers) as possible may seem like a good idea. However, the reality is that businesses which widen their product/service offering often don’t see any growth, or even worse, experience a decline.

On the other hand, businesses that find the right market segment and narrow their focus are the ones that experience impressive growth. Appealing to fewer customers to increase sales may sound counterintuitive, but is typically the underlying foundation for growth.

Why You Need To Become The Big Fish In A Small Pond

Most businesses should strive to become the big fish in a small pond because when you specialize and narrow down your product/service offering, you have the opportunity to become the leader (big fish) in your niche category.

Once you become a leader you will reap the benefits, because most buyers look to buy from category leaders. Even if your product/service is better, most buyers will still turn to a category leader because they are a safer choice.

The fear of the unknown only intensifies the higher the price is. 

Many entrepreneurs fail to grasp this reality – most buyers are not early adaptors, so they will continue to buy a known product/service from a category leader, even if it is inferior to your new/better solution. 

Another advantage that category leaders have over everyone else is the ability to promote the category. You may be thinking, why would a business promote the category and not themselves? Because when you are a category leader, you will benefit the most from the category growth.  For example, Starbucks did a great job promoting the coffee drinking culture in the US, and what did most consumers do? They lined up to buy coffee from the category leader (Starbucks).

The same principle applies to small categories as well. For example, most successful realtors only focus on a small area. In essence, they strive to become the leader/expert in a smaller area (e.g., West Bronx) rather than the Bronx, or New York City.

Once they establish this leadership position, they can focus their efforts on promoting the area, home values, and investment opportunities – all soft-selling techniques. Naturally, when the homeowner is ready to buy, sell, or invest, they will seek out the category leader (top performing realtor in the area).

Perception Is Extremely Important

What’s important to remember is that most people associate experts with specialization, so if you are perceived to be a generalist you will likely fall into the “Jack of all trades, master of none” category. We can’t stress this enough.

If you are perceived as a generalist, you will lose out to a specialist.

Another benefit of specializing and becoming a leader in a smaller category is that you can charge higher prices. When you are a category leader, you must be the best or one of the best, right? Most people don’t want to admit that they associate price with quality, or buy just because of a brand, but they do.

There is nothing wrong with this thinking, we are short on time, so it’s unrealistic to think that people will research 10 different alternatives for every purchase they make. A more realistic scenario is that your average buyer only has time to review 2-3 different options, and the good news is, as a category leader you will always be in the conversation.


For most businesses specializing and narrowing down the focus will result in greater growth and higher sales. In the world where we are bombarded with more and more information every day, it’s almost impossible to stand out as a small company in a larger/broad category. With that in mind, find a small market category/segment that you can ultimately dominate, and you will reap all the benefits of being a category leader (big fish in a small pond).

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